Inheritance is distributed with or without a will along two different paths, but both end the same way: after debts and taxes are paid, property goes to specific people. With a will, the deceased’s written instructions control who receives what. Without one, state intestacy law imposes a fixed order of heirs, starting with spouse and children and moving outward from there. In either case, certain large assets — life insurance, retirement accounts, jointly owned property — pass directly to whoever is named on them, and neither the will nor the intestacy statute has any say over those.
How a Will Directs Who Gets What
A will lets the person making it name beneficiaries and assign specific property to each one. It might leave a house to one child, a bank account to another, and a donation to a charity. After the specific gifts are fulfilled and debts and expenses are paid, whatever is left forms the residuary estate, and most wills name someone to receive that leftover portion too.
The will also names an executor, the person responsible for moving the estate through probate, paying creditors, filing tax returns, and handing assets to the right people. Courts give significant weight to a will’s instructions, but they won’t enforce provisions that violate state law. A will that tries to completely disinherit a spouse, for example, runs into state protections that guarantee the spouse a share regardless.
What Happens Without a Will
Dying without a valid will (dying “intestate”) means the state decides who inherits. Every state has intestacy laws that create a fixed hierarchy of heirs, and the estate is divided according to that formula regardless of what the deceased may have wanted. Instead of the executor the deceased never named, the court appoints an administrator to handle the estate.
The hierarchy generally starts with the surviving spouse and children, then moves to parents, siblings, and more distant relatives if no closer family exists.1Legal Information Institute. Intestate Succession How the estate is split between a surviving spouse and children varies by state. In the nine community property states, the surviving spouse already owns half of everything earned during the marriage, and intestacy laws only divide the deceased spouse’s separate property. In the remaining states, the spouse typically receives a fixed fraction that depends on whether children or parents also survive.
One detail that trips families up: adopted children have full inheritance rights under intestacy laws in virtually every state, just like biological children. Stepchildren generally inherit nothing unless they were legally adopted. A stepparent who wanted a stepchild to inherit needed a will or an adoption to make it happen.
Per Stirpes: How Shares Pass Down Family Branches
Most intestacy statutes distribute property “per stirpes,” meaning inheritance follows family branches. If one of the deceased’s children died first, that child’s share doesn’t disappear or get redistributed among the surviving siblings. It passes down to the deceased child’s own children.2Legal Information Institute. Per Stirpes Many wills also use per stirpes language, so the concept applies whether or not a will exists.
When No Relatives Can Be Found
If the state exhausts its entire list of eligible relatives and nobody qualifies, the estate “escheats” to the state government. This is rare, but it happens, particularly with people estranged from family or without close relatives.
Spousal Rights That Override a Will
A surviving spouse has stronger legal protections than most people realize. In most states, a spouse can claim an “elective share” of the estate even if the will leaves them nothing. The elective share is typically about one-third of the estate, though the exact fraction varies by state.3Legal Information Institute. Elective Share The spouse has to actively petition the court to claim it; it doesn’t happen automatically.
The classic scenario is a second marriage where the deceased left everything to children from a first marriage. The new spouse can override the will and claim their elective share, reducing what those children receive. Anyone in a blended family should plan around this rather than assume the will controls everything.
Assets That Skip the Will and Intestacy Entirely
Some of the largest assets a person owns never go through probate at all. They transfer directly to a named beneficiary or co-owner, regardless of what the will says or what intestacy laws would require:
- Life insurance proceeds go to the beneficiary named on the policy, not through the estate.
- Retirement accounts, including 401(k)s and IRAs, transfer to whoever is listed as the designated beneficiary.4Internal Revenue Service. Retirement Topics – Beneficiary
- Jointly owned real estate or bank accounts with a right of survivorship pass automatically to the surviving co-owner.
- Payable-on-death (POD) bank accounts and transfer-on-death (TOD) brokerage accounts go directly to the person named on the account.
- Property held in a revocable living trust transfers according to the trust’s terms, outside of probate.
For many families these non-probate assets make up the bulk of the estate. Someone can spend hours drafting a detailed will, but if their largest asset is a 401(k) with an ex-spouse still listed as beneficiary, the ex-spouse gets it. The will is irrelevant for that account.
When the Beneficiary Designation Contradicts the Will
The beneficiary designation on a life insurance policy, retirement account, or POD account wins over anything in the will. This isn’t a close call. Federal law governs most employer-sponsored retirement plans and requires administrators to pay benefits to whoever is named on the beneficiary designation form, not whoever the will names. Courts have upheld this repeatedly, including in cases where a divorce decree said otherwise.
The practical result is that outdated beneficiary designations are one of the most common and expensive estate planning mistakes. After a divorce, remarriage, birth of a child, or death of a named beneficiary, every designation on every account needs to be reviewed. The will cannot fix a beneficiary designation someone forgot to change.
Debts and Taxes Come Out First
Before a single dollar reaches any heir, the estate pays the deceased’s debts. Credit card balances, medical bills, mortgages, funeral costs, and the administrative expenses of probate all come out of the estate’s assets. The executor or administrator identifies creditors, notifies them, and pays valid claims.5Internal Revenue Service. Responsibilities of an Estate Administrator
If the estate can’t cover all debts, creditors take a loss. As a general rule, heirs and family members are not personally responsible for the deceased’s debts out of their own money. Exceptions exist: co-signers, surviving spouses in community property states, and executors who mishandled the estate can be on the hook.6Federal Trade Commission. Debts and Deceased Relatives Debt collectors who pressure family members to pay from personal funds are often overstepping the law.
Federal Estate Tax
Most people who inherit money owe no federal tax on it. Federal law excludes the value of inherited property from the beneficiary’s gross income.7Office of the Law Revision Counsel. 26 USC 102 – Gifts and Inheritances There is no federal inheritance tax.
The federal estate tax applies to the estate itself, not to beneficiaries. For 2026, estates valued at $15,000,000 or less owe nothing. Only the portion above that threshold is taxed, at rates reaching up to 40%.8Internal Revenue Service. Whats New – Estate and Gift Tax Married couples can effectively double the exemption through portability, sheltering up to $30 million. The executor files the return and pays the tax before distributing anything.9Internal Revenue Service. Estate Tax
State Inheritance and Estate Taxes
Five states impose their own inheritance tax on beneficiaries, with the rate depending on the beneficiary’s relationship to the deceased. Closer relatives pay lower rates or qualify for exemptions. About a dozen states also levy a separate state-level estate tax, often with a much lower exemption threshold than the federal one. An estate that owes nothing federally can still face a six-figure state estate tax bill.
Inherited Retirement Accounts
Retirement accounts are the big exception to the “no income tax on inheritances” rule. Money in a traditional 401(k) or IRA was never taxed going in, so the beneficiary owes income tax as they withdraw it. Most non-spouse beneficiaries must empty an inherited retirement account within ten years of the original owner’s death under the SECURE Act’s 10-year rule.4Internal Revenue Service. Retirement Topics – Beneficiary A surviving spouse has more flexibility, including the option to roll the account into their own IRA and delay withdrawals. Inherited Roth IRAs are generally tax-free on withdrawal because contributions were already taxed, though the 10-year deadline still applies to non-spouse beneficiaries.
The Stepped-Up Basis
When you inherit property like stocks or real estate, your tax basis resets to the fair market value on the date of the original owner’s death.10Office of the Law Revision Counsel. 26 US Code 1014 – Basis of Property Acquired From a Decedent If a parent bought stock for $10,000 forty years ago and it’s worth $500,000 when they die, the heir’s basis is $500,000. Selling the next day at $500,000 produces zero capital gains tax. The $490,000 in appreciation is never taxed. Stepped-up basis applies to most inherited assets except retirement accounts and a few other categories.
Challenging a Will
Anyone who believes a will is invalid can challenge it in probate court, but the grounds are narrow and the burden of proof is real. Courts start from the presumption that the will is valid. Successful challenges typically rest on one of these arguments:
- Lack of mental capacity: the person who made the will didn’t understand what they owned, who their family was, or what they were doing when they signed it.
- Undue influence: someone in a position of trust pressured or manipulated the will-maker into changing the will to benefit them. The caretaker who isolates an elderly person and steers them to a lawyer is the textbook example.
- Improper execution: the will wasn’t signed or witnessed according to state requirements. Most states require two witnesses who watch the person sign.
- Fraud or forgery: someone lied to the will-maker about what they were signing, or the document itself was fabricated.
Deadlines for filing a will contest vary by state but are generally short, often measured in months from the date heirs receive notice that the will has been admitted to probate. Missing the deadline usually means losing the right to challenge, with limited exceptions for minors or people who never received proper notice. Will contests are expensive, emotionally draining, and can tie up an estate for years. They succeed far less often than people assume.
How Long Probate Takes
Probate is the court-supervised process of validating the will, appointing the executor or administrator, identifying and valuing assets, paying debts, and distributing what remains. The executor files the will with the probate court, and the court issues authority to act on the estate’s behalf.5Internal Revenue Service. Responsibilities of an Estate Administrator
A straightforward estate with no disputes typically takes six to twelve months to close. Contested estates, complex assets, or beneficiary disagreements can stretch the process to two years or longer. Creditors must be given a window to submit claims, and that waiting period alone can take several months depending on the state. Court filing fees, attorney fees, and executor compensation all come out of the estate’s assets, reducing what beneficiaries ultimately receive.
Small Estate Shortcuts
Every state offers some form of simplified procedure for small estates. If the estate’s value falls below a threshold set by state law, heirs can often use a small estate affidavit or summary administration instead of full probate. Thresholds vary widely, from as low as $15,000 in some states to $200,000 in others. The simplified process is faster, cheaper, and usually doesn’t require a lawyer. Anyone dealing with a modest estate should check whether it qualifies before assuming full probate is necessary.